Can battery rental reduce consumer jitters with EVs? Smart thinks so

Editor's note: An earlier version of this story incorrectly identified the supplier of the battery used in the 2013 Smart ForTwo Electric Drive.

Consumers have a lot of gripes about the battery life in high-tech products.

Batteries seem to conk out way before the products do. And with age, the ability of batteries to hold a charge deteriorates. Another concern is the cost of replacing those batteries, which often seems higher than the value of the laptop or cell phone the batteries power.

Small wonder there's even more anxiety about electric vehicle batteries. Smart USA chief Mark Webster says the microcar brand is well aware of the concerns.

And it's why Smart is allowing buyers and lessees to rent the battery -- and lower the purchase price or monthly leases -- in the ForTwo Electric Drive coupe that went on sale this week.

"We know that there are many potential customers out there for whom an electric drive vehicle would be ideal but who have concerns about battery maintenance costs, battery life, repair cost, range anxiety and so on," Webster said.

Buyers will pay $20,650 for the vehicle without the battery -- a savings of $5,100 from the $25,750 price for the EV with battery. The monthly battery rental is $80, plus taxes, and covers annual maintenance and replacement, if necessary. The battery is guaranteed for up to 10 years.

Lease customers pay $199 a month, with a down payment of $2,000 for capital cost reduction, with the battery rental included. The lease rate is low because the car's residual value is expected to be higher when the battery is replaced at lease end.

The rental contract for the battery can be transferred to a new owner for up to 10 years with no mileage restrictions.

While Mercedes expects most customers will choose the battery rental option, given its popularity in Europe, a traditional lease of $430 a month is also available.

The cost of owning a Smart Electric Drive goes down more for owners eligible for the $7,500 tax credit on EVs.

So what are the advantages if the battery is already covered under Smart's four-year/50,000 mile warranty? If battery efficiency goes below 80 percent, Smart will replace rather than repair it.

And Smart says there's another plus: "Should battery technology evolve to a new and better level from Daimler's joint venture Deutsche ACCUmotive, then owners can, with advance notice, switch their contract to the new battery pack without any change in the terms or rates of the contract."

The joint venture's battery will power the new Mercedes-Benz B-class Electric Drive car that goes on sale next year and will be the only plug-in electric wearing the three-point star. Smart is owned by Mercedes.

The battery in the 2013 Smart ForTwo Electric Drive is supplied by Deutsche ACCUmotive.

No surprise that Smart expects most buyers to opt for the battery rental.